Correlation Between Tyson Foods and Hershey
Can any of the company-specific risk be diversified away by investing in both Tyson Foods and Hershey at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Tyson Foods and Hershey into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tyson Foods Cl and Hershey Co, you can compare the effects of market volatilities on Tyson Foods and Hershey and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Tyson Foods with a short position of Hershey. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tyson Foods and Hershey.
Diversification Opportunities for Tyson Foods and Hershey
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Tyson and Hershey is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Tyson Foods Cl and Hershey Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hershey and Tyson Foods is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Tyson Foods Cl are associated (or correlated) with Hershey. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hershey has no effect on the direction of Tyson Foods i.e., Tyson Foods and Hershey go up and down completely randomly.
Pair Corralation between Tyson Foods and Hershey
Assuming the 90 days trading horizon Tyson Foods Cl is expected to generate 0.98 times more return on investment than Hershey. However, Tyson Foods Cl is 1.02 times less risky than Hershey. It trades about -0.11 of its potential returns per unit of risk. Hershey Co is currently generating about -0.49 per unit of risk. If you would invest 5,802 in Tyson Foods Cl on October 28, 2024 and sell it today you would lose (180.00) from holding Tyson Foods Cl or give up 3.1% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tyson Foods Cl vs. Hershey Co
Performance |
| Timeline |
| Tyson Foods Cl |
| Hershey |
Tyson Foods and Hershey Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tyson Foods and Hershey
The main advantage of trading using opposite Tyson Foods and Hershey positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tyson Foods position performs unexpectedly, Hershey can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Hershey will offset losses from the drop in Hershey's long position.| Tyson Foods vs. Catalyst Media Group | Tyson Foods vs. Liberty Media Corp | Tyson Foods vs. Solstad Offshore ASA | Tyson Foods vs. Grand Vision Media |
| Hershey vs. Alfa Financial Software | Hershey vs. Roper Technologies | Hershey vs. Allianz Technology Trust | Hershey vs. Polar Capital Technology |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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